The Xbox 360 is still selling like hot cakes, but rumors surrounding the next-gen Xbox console are coming in thick and fast. The media has even come up with a tacky name for the Xbox 360 successor – “Xbox 720″! With conflicting rumors and absolutely no concrete information, it’s nigh impossible to figure out exactly what Microsoft has in store for us. However, one thing that is almost certain is that the next-gen Xbox won’t show up before 2013. The 360, along with its Kinect peripherals, are simply selling too well for Microsoft to consider a successor. As Digital Foundry rightly argues, Microsoft will essentially be cutting its profits if it releases a new console in 2012. A next-gen console demands state of the art production facilities and often has to be subsidized during the initial years.

Nevertheless, whenever the Xbox successor shows up, it will probably come in two flavors. Digital Foundry believes that Microsoft will release a stripped down version of the next-gen Xbox that will essentially act as a set-top box and support casual arcade and Kinect games. The lower-end device will help Microsoft in tackling the challenge posed by WiiU. The second full-powered system will be targeted at hardcore gamers and compete with Sony’s PlayStation 4. It will feature an optical drive, a hard disk and backward compatibility with 360 games to entice the audience that doesn’t mind paying a premium.

Pallab De is a blogger from India who has a soft spot for anything techie. He loves trying out new software and spends most of his day breaking and fixing his PC. Pallab loves participating in the social web; he has been active in technology forums since he was a teenager and is an active user of both twitter (@indyan) and facebook .